By Gordon Isfeld
OTTAWA (MaceNews) – Prices for Canadian goods surged in May, with the overall cost of consumer items jumping by 2.4% annualized- up from 2.0% in April – and marking the biggest year-over-year increase since October of last year, Statistics Canada said Wednesday.
The gains in consumer costs were led by food items, which were up 3.5% over the past 12 months, according to the federal data agency said. Transportation was also higher in May, at 3.1%, followed by shelter costs, which were up 2.7% year over year.
Meanwhile, energy prices were down 0.1% in May from a year earlier, Statistics Canada said.
“Inflation at last? Maybe for one month, as as June looks like it’s going to be quite soft with gasoline prices falling sharply and the seasonally strong period for total CPI coming to an end. and the seasonally strong period for total CPI coming to an end,” said economist Benjamin Reitzes, at BMO Capital Markets.
“Even so, this is just one more reason – along with an expected economic rebound in Q2 – for the BoC to remain patient and resist the temptation to follow the parade of global central bankers sounding more dovish.”
Canada’s annual pace of inflation had already hit its stride in April, reaching policymakers’ overall target of 2% – following a strong year-over-year pace of 1.9% in March and a 1.5% performance in February.
Higher oil prices lifted the cost of gasoline – and a good chunk of those increases have been blamed on federally imposed carbon levies.
The Statistics Canada report could provide the Bank of Canada with additional reason to maintain its current interest rate level beyond the 2% rate. Many analysts had been anticipating an increase in borrowing costs of around 2.1%.